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Principles of Marketing > Ch 19 > Flashcards

Ch 19 Flashcards

Pricing Concepts (49 cards)

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1
Q

Price

A

That which is given up in an exchange to acquire a good or service

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2
Q

Revenue

A

The price charged to customers multiplied by the number of units sold

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3
Q

Profit

A

Revenue minus expenses

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4
Q

Return on investment (ROI)

A

Net profit after taxes divided by total assets

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5
Q

Market Share

A

A company’s product sales as a percentage of total sales for that industry

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6
Q

Status quo pricing

A

A pricing objective that maintains existing prices or meets the competition’s prices

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7
Q

Demand

A

The quantity of a product that will be sold in the market at various prices for a specified period

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8
Q

Supply

A

The quantity of a product that will be offered to the market by a supplier at various prices for a specified period

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9
Q

Elasticity of Demand

A

Consumers’ responsiveness or sensitivity to changes in prices

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10
Q

Elastic Demand

A

A situation in which consumer demand is sensitive to changes in price

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11
Q

Inelastic Demand

A

A situation in which an increase or a decrease in price will not significantly affect demand for the product

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12
Q

Dynamic Pricing

A

The ability to change prices very quickly, often in real time using software programs

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13
Q

Surge Pricing

A

Occurs in a fluid market, where demand changes rapidly often hourly. When demand increases, so do prices and vice versa

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14
Q

Variable Cost

A

A cost that varies with changes in the level of output

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15
Q

Fixed Cost

A

A cost that does not change as output is increased or decreased

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16
Q

Markup pricing

A

The cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for

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17
Q

Keystoning

A

The practice of marking up prices by 100 percent, or doubling the cost

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18
Q

Break-even analysis

A

A method of determining what sales volume must be reached before total revenue equals total costs

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19
Q

Extranet

A

A private electronic network that links a company with its suppliers and customers

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20
Q

Price Strategy

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A

A basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product’s life cycle

21
Q

Price Skimming

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A

A pricing policy whereby a firm changes a high introductory price, often coupled with heavy promotion

22
Q

Penetration Pricing

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A

A pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market

23
Q

Base Price

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A

The general price level at which the company expects to sell the good or service

24
Q

Quantity Discount

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A

A price reduction offered to buyers buying in multiple units or above a specified dollar amount

25
Cumulative Quantity Discount
A deduction from list price that applies to the buyer's total purchases made during a specific period
26
Noncumulative Quantity Discount
A deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period
27
Cash Discount
A price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill
28
Functional Discount (Trade Discount)
A discount to wholesalers and retailers for performing channel functions
29
Seasonal Discount
A price reduction for buying merchandise out of season
30
Promotional allowance (trade allowance)
A payment to a dealer for promoting the manufacturer's products
31
Rebate
A cash refund given for the purchase of a product during a specific period
32
Value-based Pricing
Setting the price at a level that seems to the customer to be a good price compared to the prices of other options
33
FOB origin pricing
A price tactic that requires the buyer to absorb the freight costs from the shipping point ("free on board")
34
Uniform delivered pricing
A price tactic in which the seller pays the actual freight charges and bills every purchases an identical, flat freight charge
35
Zone pricing
A modification of uniform delivered pricing that divides the Untied States (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone
36
Freight absorption pricing
A price tactic in which the seller pays all or part of the actual freight chargers and does not pass them on to the buyer
37
Basing-point pricing
A price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped
38
Single-price tactic
A price tactic that offers all goods and services at the same price (or perhaps two or three prices)
39
Flexible pricing (variable pricing)
A price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities
40
Price lining
The practice of offering a product line with several items at specific price points
41
Leader pricing (loss-leader pricing)
A price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store
42
Bait Pricing
A price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise
43
Odd-even pricing (psychological pricing)
A price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality
44
Price Bundling
Marketing two or more products in a single package for a special price
45
Two-part pricing
A price tactic that charges two separate amounts to consume a single good or service
46
Consumer penalties
An extra fee paid by the consumer for violating the terms of the purchase agreement
47
Unfair trade practice acts
Laws that prohibit wholesalers and retailers from selling below cost
48
Price fixing
An agreement between two or more firms on the price they will charge for a product
49
Predatory Pricing
The pricing of charging a very low price for a product with the intent of driving competitors out of business or out of a market

Principles of Marketing (7 decks)

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